The ATO says there is a tax gap of $31Bn
This gap is the difference between what they should collect compared to the amount they actually collect.
In 2017-18 they collected $31.2Bn less than they believe was due to them.
We all like to think that big business avoid taxes. But according to the ATO $11bn, or 35% of the gap, is due to small business.
The country is gorging on debt. This should be manageable as long as growth exceeds the rate of interest the country pays, but I am expecting the ATO to ramp up its audit activity.
But they have to be careful.
Going after a restaurant owner who has been decimated by Covid19 is not good PR. It does not look good so I am expecting them to target industries and professions they know will not give them bad PR and who have the ability to pay.
I am expecting the ATO to target medical professionals. Here’s why.
Most medical professionals think they pay the right amount of tax. There are some that do not follow the PSI rules or use bucket companies as advised by their accountants.
But there are many accountants who do not follow the rules which means the tax paid by medical professionals is wrong.
The ATO know this but due to lack of resources they cannot target everyone.
If you are a medical professional using a bucket company or not following PSI rules there is a chance are you are secretly building up massive tax liabilities without realising it.
Here is an example. A specialist on the advice of their accountant splits their income to his wife or a bucket company. The saves tax of $20,000 and they have been doing this for 10 years. This is tax ‘saved’ of $200,000.
The ATO raise an audit and as PSI rules have not been followed issue a demand of $450,000 (which is the tax underpaid, interest and penalties). This is due immediately or under a two year payment plan at least $18,750 month.
If you are using a bucket company or splitting income this could be your situation.
Please make sure you are following the correct rules when it comes to PSI and bucket companies. Check and double check with your accountant and make sure they put it in writing.
Would you like a second opinion?
You can get in touch in 3 ways:
• Call us on 1300 440 316
• Email us on hitesh@medisuccess.com.au
• Click this https://medisuccess.com.au/contact-us/
